Market for Specialized Medicine to be Twice the Size of Current Prescription Drug Market

NEW YORK, Feb. 25, 2009 (GLOBE NEWSWIRE) -- The current role of the pharmaceutical industry's sales and marketing workforce will be replaced by a new model over the next ten years as the industry shifts from a mass-market to a target-market approach that will drive revenue growth in the industry and create value for patients, according to a new report published by PricewaterhouseCoopers LLP (PwC).

The growth of specialized medicine and the changing healthcare landscape are creating new opportunities for pharmaceutical companies that won't rely on an army of sales representatives, billions of dollars in free drug samples, millions spent on TV advertising and aggressive marketing to doctors and patients to ensure brand growth or commercial success, according to PwC.

"The science is leading the industry towards specialist therapies, and sales and marketing will have to adapt to this change," said Anthony Farino, PricewaterhouseCoopers' U.S. pharmaceutical and life sciences advisory services leader. "Healthcare policymakers, payers and patients are now assessing the relative economic, health and societal value of different medicines. Pharmaceutical companies will need to package products and health services in a way that adds value, demonstrating that their medicines really work, that they provide value for the money and potentially reduce healthcare costs by being better than alternative forms of intervention."

According to PwC, the pharma industry's sales force of the future will be dramatically smaller, more agile and require new skills, including an education in science or health, greater understanding of specific complex diseases and the ability to negotiate with powerful payers and medical specialists. Its focus will no longer be just selling products, but on better managing health outcomes through a full complement of health management services, including health screenings, compliance programs and nutritional advice.

In its paper, Pharma 2020: Marketing the Future, PricewaterhouseCoopers outlines the convergence of factors leading to a new marketing and sales model, including:

Balance of Power is Shifting to Payers: For years, pharmaceutical companies have decided what their products were worth and priced them accordingly, investing little effort in understanding the payer's perspective or what the market was willing to buy. With healthcare costs rising, payers, including governments and private insurers, are becoming the ultimate arbiters of pricing and value, reimbursement and prescribing decisions. There will have to be a stronger link between marketing and R&D, according to PwC. Pharma companies will start thinking about product pricing earlier in the development phase, commercially de-risking their portfolios in phase II by terminating any drug candidate that looks unlikely to Generate commercial demand.

All For One and One for All: The often contentious relationship and competing agendas that have long existed among pharma companies, payers and providers will end as pay for performance and comparative effectiveness analysis force them to work together for the common goal of improving health outcomes for patients and demonstrating real value for the money.

Product Portfolio to Change: The current blockbuster model was designed to promote mass-market treatment of common diseases such as hypertension, diabetes, and high cholesterol to primary care physicians. Sixty-five percent of these drugs are now sold generically in the U.S. and 70 percent in Central and Eastern Europe. In the next ten years, only drugs considered truly innovative will be financially rewarded with a premium price. Pharma companies that choose to focus on specialized medicines will gradually shift their product mix to include more biologics and medicines that are targeted to specific and more complex disease states.

Specialized medicines to soar: Science is moving to specialist medicine - highly targeted therapies developed for specific complex conditions, typically administered by a specialist versus general practitioner, developed in small doses and in need of refrigerated handling and storage. Specialized drugs are significantly more expensive, in some cases costing thousands for a single dosage or treatment. The global market for specialized medicines, which accounted for 44 percent of worldwide prescription drug spending in 2008, could be twice the size of the current market for all prescription drugs by 2020, according to PwC.

Regulatory Harmonization will Facilitate Simultaneous Multi-Country Launches: The FDA and other leading regulatory agencies are exploring various new methods for assessing, approving and monitoring innovative medicines. While a single global regulatory body is unlikely, global regulatory harmony will make simultaneously multi-country launches routine. By 2020, the launch of a new drug will become much more incremental. The big bang, big budget, blockbuster launch will be replaced by a process in which clinical outcomes information is continuously disseminated in a series of much smaller waves. New medicines will be launched with 'live licenses', conditional on further in-life testing to substantiate their safety and efficacy in larger/different populations.

According to PwC, the future sales and marketing process must master each of these dynamics and synthesize them into a new system. Pharma companies will need to restructure their marketing functions accordingly, with the appointment of key account managers who will be responsible for collaborating with healthcare payers to shape the information doctors receive and provide hard proof that a product really is safer, more effective or more economical than its rivals before they add it to the formulary.

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